Gobsmacked - can good educators be such bad traders?

[MichaelD]

Cutting losses for the sake of it makes no sense, unless it's an emotional problem of course.

"I never met a large loss that wasn't a small loss to begin with"

If you have a stop and your plan says to exit when the stop is hit and you don't, you have a problem.

 

[cuttlefish]

Think about it -- if you're short and the stock gaps up against you, but the situation suggests a positive expectancy from that point on, then it makes perfect sense to hold. The current situation has to be evaluated independently from action that's already been taken : sunk losses.

Cutting losses for the sake of it makes no sense, unless it's an emotional problem of course.

Then why did he finally cut the losses on the subsequent day after he got gapped up a second time, when he again expected the gap to be filled? And why, after taking the discretionary override on his initial plan and watching for a gap fill, didn't he put a trailing stop or some exit strategy to exit on reversal of the gap fill process?

Why did he exit at the worst possible time - the peak - after entering the short trade?

 

[BBand]

This could go on forever

We have two camps here - system traders with inflexible rules
and discretionary traders with rules that can be over ridden if the situation justifies it

Both types of trade WORK

Use the one that you are comfortable with

Discrectionary trading works well across all markets conditions, and its easy to change to a new setup that works in the current market condition. Personnally I always set initial stops, never lower them, and move them up ASAP to give a free trade. I have a variety of exits and use the one that I think most suitable for that trade.
My initial stop is always tight (low risk), and I do not mind if they get hit and I have to re-enter, if my rules allow

System trading - I'm not sure - but I would imagine it works best in trending markets, the stronger the better. I would think that trading from the weekly would be a good idea (less noise)

Just my opinion
Trade well
Peter

 

[cuttlefish]

What about the trading style where you ignore your stops, don't set up new exit strategies when you take a 'discretionary override' and finally exit in panic when you think your going to lose too much ... does that one work?

Its got nothing to do with the fact a discretionary override was taken - its the way the trade was managed after the override.

imo a good trader would have taken the stop, then re-entered - even if it was an immediate re-entry. Because there is a pscyhological step to taking a re-entry that requires a proper assessment of risk/reward of the new trade, and also a formulation of an exit plan. It also reinforces the discipline of taking planned exits. A very experienced trader confident in their self discipline may have done all of this without physically exiting and re-entering but imo the subsequent trade management would have played out differently.

 

[brty]

Hi,

If VT regards himself as a master because of his knowledge of markets and exceptional traders, then he possibly thinks that the following levels of mastery apply to himself.....

This is not about just trading but mastery in anything....

1. Know the rules

In the first stage you learn the rules. You learn what works and what doesn’t. Discovering when to apply certain techniques and processes.

2. Know when to break the rules

In the second stage you learn when to break those sames rules. As a musician, you learn when to do something that shouldn’t work, but does. As a photographer, you know to ignore a certain general rule about lighting in a specific situation. And so it goes on. You reach a level of experience that means you don’t just know the rules, you know the exceptions to the rules.

3. Make the rules

In the final stage, you make the rules. You create exceptional new techniques that others then follow. This is when you have become a master.

Be a Master!

With dedication and determination you can be a master. Study the leaders, see how they do it - learn their tricks. Then apply your own individual character to create unique ways of doing things. Eventually you’ll be the one that others are studying.

My opinion is that he thought this was a time to break the rules, but panicked in the end, not good for a trader.
A trader like Jim Rogers would sell then hold on no matter what, then pile in when the market proves him correct, obviously a different style of trading.

Perhaps going public with this trading mistake is his form of punishment to himself, to help make sure he doesn't do it again.

brty

 

[MichaelD]

I felt I had to resurrect this thread to offer this amazing contrast to our educator who can't trade.

http://www.pmkingtrading.com/id48.html

The relevant blog entries are;

4th November - How to generate an instant -1R loser
and
5th November - Lessons learned from an instant -1R loser

 

[tech/a]

I'm sure Van Tharp can trade.
Thats a rediculous comment.
Your perception of his comments is one
of self denial (his). Fine I'm sure many of us
have done it. You of course wont have.

Interestingly your subjects top reading recommendations is none other than Van Tharp.

Good link all the same.

 

[wayneL]

I felt I had to resurrect this thread to offer this amazing contrast to our educator who can't trade.

http://www.pmkingtrading.com/id48.html

The relevant blog entries are;

4th November - How to generate an instant -1R loser
and
5th November - Lessons learned from an instant -1R loser

Geezz, that sucks.

But he's right, you learn stuff , and you move on.

 

[MichaelD]

I'm sure Van Tharp can trade.
Thats a rediculous comment.

Your perception of his comments is one
of self denial (his). Fine I'm sure many of us
have done it. You of course wont have.

Interestingly your subjects top reading recommendations is none other than Van Tharp.

1. I have never seen any evidence that Van Tharp can trade. Have you? Conversely, I have seen plenty of evidence that he has no self-discipline and chops and changes his trading style frequently, jumping from one losing method to another. Perhaps you perceive him to be a successful trader for spurious reasons.

2. I have made many trading errors and will continue to do so. I face those demons as they arise. Trading errors are inevitable. Making them more than once is unforgivable. Blaming everyone else but yourself for your trading errors is even more unforgivable.

3. As already discussed, the functions of good trading education and that of good trading are separate and not necessarily present together.

 

[tech/a]

No I don't.
Radge maybe able to more definitively answer the question as he has met and I believe spent time with him on a level that was not part of a teaching course.
Do you have evidence that your "Professional" trader is consistently profitable?

We have no evidence your consistently profitable.
Or I particularly now as I'm not trading any systems.

I see your point Michael but don't understand your labouring of it!